The provincial and federal government have forced some Canadians into looking for real estate than they thought. Both have ushered in two different laws that will cost buyers money.
At the provincial level the government has implemented the HST (Harmonized Sales Tax), effect July 1, 2010. It is a 12% tax on new homes and condominiums priced to $525,000.00. Homes costing less than the stated amount will be eligible for a rebate, up to a maximum of $26,250.00. The rebate will only apply to primary residences, not second homes or investment properties. Check out this link for additional information, http://www.sbr.gov.bc.ca/documents_library/shared_documents/HST/new-housing-rebates.pdf
On April 19, 2010 the federal government is trying to brace the Canadian real estate buyers market for the increase in interest rates. The first adjustment has been made to the qualifying details. Mortgage insurers will have to ensure that all borrowers qualify using a 5 year fixed rate when calculating the debt servicing ratios. Secondly, borrowers seeking financial flexibility can currently refinance their mortgage and increase the amount they are borrowing on the security of their home up to a limit of 95% of the value of the property. The adjustment will lower the maximum amount of the mortgage loan in a refinancing of a government-backed high-ratio mortgage loan to 90% of the value of the property, consistent with the principle that home ownership is a tool for savings. Lastly, a minimum down payment of 20% is required for non-owner-occupied properties. At present, borrowers may purchase a residential property with a 5% down payment. The change will require a 20% down payment for small non-owner-occupied residential rental properties. Borrowers purchasing owner-occupied residential properties which also include some rental units (such as a duplex) will still be able to access government-backed mortgage insurance with a 5% down payment.
Contact me to find out how these changes in legislation will effect your real estate transaction.
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